Sustainable Flying Blog
  • Offsetting
21 December 2020

New carbon exchange to boost offsets trade

By Andrew Stevens

On the sparsely populated south-west coast of the Dominican Republic, nestled between the Bahoruco mountain range and the sparkling waters of the Caribbean, a new climate-friendly power project is taking shape.

The Larimar wind power plant is a two-stage development which, when completed, will reduce CO2 emissions by an average 300,000 tonnes a year - the equivalent of about 900,000 barrels of oil.

It is a key part of the Dominican Republic’s long-term goal of reducing its dependence on fossil fuels for its energy needs.

In a poor country like the Dominican Republic, funding projects like these can be difficult.

That’s where the aviation industry is helping.

Larimar is the first project to be traded on IATA’s new Aviation Carbon Exchange (ACE), launched in late November as a platform for aviation companies to buy carbon offsets.

Airlines will be able to choose from hundreds of emission-reduction projects traded on ACE to compensate for the emissions they create. The industry has pledged to achieve carbon neutral growth in emissions by 2020 and offsets are an important piece in the puzzle in reaching that target in the short and mid-term.

In keeping with the industry’s reputation for innovation, ACE is the only exchange to be integrated into the IATA Clearing House, which offers a secure settlement system that guarantees both payment and delivery of carbon offsets.

JetBlue made the historic first purchase on ACE buying carbon credits in the Larimar project.

Offsets are growing in popularity as a result of the aviation industry pledge to cut its carbon footprint. In 2009 it became the first global sector to announce a specific target – to cut emissions to half of 2005 levels by 2050.

The ground-breaking agreement identified new technology, including electric and hydrogen powered flight, more efficient operations and infrastructure, sustainable aviation fuels and carbon offsets as the four pillars to achieve its 2050 target.

In 2016 the International Civil Aviation Organisation ratified the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) to regulate and measure offsetting programmes.

Almost 100 airlines have signed up to the voluntary pilot phase of CORSIA, but from 2027 the programme will be mandatory for the world’s airlines to keep carbon emissions pegged at 2019 levels.

CORSIA applies only to international flights, but many airlines are already offsetting their domestic flights, while a growing number of passengers are contributing to offset schemes to reduce their personal carbon footprint.

As the market matures so does the choice of offsets.  Projects offered now might restore forests, update power plants and factories or increase the energy efficiency of buildings and transportation. You can now buy carbon credits for programmes that reduce methane emitted from municipal waste dumps, rewild and reforest countries areas around the world including the Amazon,  and help develop low carbon cooking fuels.

Regulation and oversight has also been beefed up to ensure that offsets actually do what they claim to with UN-backed organisations now providing certification for projects.

Airlines reiterated the industry’s commitment to cut net emissions in a resolution of the 76th IATA Annual General Meeting (AGM) in November.

As Robin Hayes, chairman of JetBlue and incoming chair of IATA’s board of governors says, now is the time to rebuild operations in more sustainable ways and set clear strategies to reduce net aviation CO2 emissions.

ACE will help the industry continue to meet our climate commitments by providing simplified and transparent access to legitimate, third-party certified carbon offsets.

Our planet is physically changing, as are the expectations of our customers, crew, members and investors. We have to respond to those changes.

Learn more about the new Aviation Carbon Exchange (ACE)

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